Establishing a Marine R&D Facility in the Scottish Central Belt A cost/quality comparison (Based on information from the Financial Times fDi Benchmark tool – April 2012) E

Competitiveness of Scottish Central Belt Value for Money Overall Attractiveness Quality of the Location Annual Operating Costs Quality Competitiveness General Business Environment Labour Availability and Quality Presence of an Industrial Cluster Infrastructure and Accessibility Living Environment

The following analysis is based on fDi Benchmark, an online location benchmarking tool provided by the Financial Times (FT) fDi Benchmark compared the Scottish Central Belt with the leading locations globally for establishing a Marine R&D Facility based on an analysis of over 55 quality factors and 10 cost factors A key emphasis was placed on: - Presence of industrial cluster – the size of the industry, track record and R&D capabilities; and - General business environment – regulatory environment, operating risk, taxation and economic growth and stability - Costs to employ specialist staff Other factors including labour availability and quality, accessibility and the living environment were also assessed Benchmarking Study

Project Profile Overview Employee TypeProfile Head count Information Technology Software Development Engineer3 Technology Engineering Specialist2 R&D / Engineering Assistant Engineer4 Chief Engineer/Technical Mgr1 Engineer10 Head of Research and Development1 R&D Team Leader2 Senior Engineer3 Senior Technical Drawer1 Technical Drawer2 Trainee/Apprentice Engineer1 Weighting Model OverviewWeight Presence of an Industrial Cluster45 Labour Availability and Quality30 General Business Environment10 Infrastructure and Accessibility10 Living Environment5

fDi Benchmark Matrix The fDi Benchmark Matrix shows the trade off between cost and quality across the 6 selected locations for the Renewable energy technology centre - Marine R&D * profile. The average cost and quality score is 100 for the selected locations. The ‘ideal’ quadrant is the top left (high quality/lower operating costs) Source: fDi Intelligence, from the Financial Times Ltd

fDi Benchmark Matrix The matrix is based on the weighting and cost model for the Renewable energy technology centre - Marine R&D * profile. The weighting model identifies the key location criteria for the project and the cost model shows the primary cost inputs for the operation. The cost and quality scores are calculated using real data on all the location requirements and cost inputs. The results indicate the different location solutions for the investor as follows: the Scottish Central Belt offers higher quality at lower cost than the average of all the selected locations Boston, New York City offer higher quality but at higher cost Lisbon, Southampton offer lower cost, but at lower quality The Operating Cost value is in GBP - United Kingdom Pound LocationQualitative Score Operating Cost Index Operating Cost Value Boston (MA) ,819,844 Lisbon ,508,355 New York City (NY) ,185,244 Scottish Central Belt ,599,844 Southampton ,589,098 Sydney ,610,142 Source: fDi Intelligence, from the Financial Times Ltd

Location Attractiveness Index The location attractiveness index shows the overall attractiveness of the 6 selected locations for the Renewable energy technology centre - Marine R&D * profile. The ratio of quality to cost is 50:50 Source: fDi Intelligence, from the Financial Times Ltd

Cost Quality Competitiveness The cost quality competitiveness uses the results of the fDi Benchmark Matrix to show the value for money of each location option. The graph shows that:  The top locations offering the highest quality for a given level of cost are the Scottish Central Belt and New York City  the Scottish Central Belt and New York City offer an above average level of quality and good value for money as there relative quality is higher than their relative cost. Source: fDi Intelligence, from the Financial Times Ltd

Cost Competitiveness The annual operating cost calculation for Renewable energy technology centre - Marine R&D * is based on the following primary input costs: Labour Cost The average cost across the selected locations for Renewable energy technology centre - Marine R&D * is GBP 2,218,753 The greatest cost saving between the selected locations is GBP1,676,888 per annum The values in the chart below are in GBP - United Kingdom Pound Source: fDi Intelligence, from the Financial Times Ltd

Cost Competitiveness LocationLabour CostProperty Boston (MA)2,439,627380,216 Lisbon1,254,148254,206 New York City (NY)2,596,347588,895 Scottish Central Belt1,104,636495,207 Southampton1,180,878408,219 Sydney1,979,886630,255 Renewable energy technology centre - Marine R&D * (City Level (Simplified)) The locations with the lowest operating costs are the Scottish Central Belt and Southampton In terms of the individual cost factors, the locations with the lowest costs are:  Labour Cost: the Scottish Central Belt and Southampton  Property: Lisbon and Boston The values in the table below are in GBP - United Kingdom Pound Source: fDi Intelligence, from the Financial Times Ltd

Quality Competitiveness The quality competitiveness assessment is based on the weight model for the Renewable energy technology centre - Marine R&D * profile which assesses each location across the following location factors: General Business Environment, Labour Availability and Quality, Presence of an Industrial Cluster, Infrastructure and Accessibility and Living Environment. The average score for the selected locations is 100. The locations with the highest quality scores are New York City and Boston Source: fDi Intelligence, from the Financial Times Ltd

Quality Competitiveness Location General Business Environment Labour Availability and Quality Presence of an Industrial Cluster Infrastructure and Accessibility Living Environment Boston (MA) Lisbon New York City (NY) Scottish Central Belt Southampton Sydney In terms of the individual quality factors, the locations with the highest scores are:  General Business Environment: New York City and the Scottish Central Belt  Labour Availability and Quality: New York City and Sydney  Presence of an Industrial Cluster: New York City and Boston  Infrastructure and Accessibility: New York City and Lisbon  Living Environment: New York City and Sydney Source: fDi Intelligence, from the Financial Times Ltd

General Business Environment The quality competitiveness breakdown for General Business Environment for the Renewable energy technology centre - Marine R&D * profile is shown below The locations with the highest overall scores for General Business Environment are New York City and the Scottish Central Belt Source: fDi Intelligence, from the Financial Times Ltd

General Business Environment Location Economic growth and stability Operating risk Taxation and incentives Regulatory environment Boston (MA) Lisbon New York City (NY) Scottish Central Belt Southampton Sydney In terms of the individual quality criteria within General Business Environment, the locations with the highest scores are: Economic growth and stability: New York City and Boston Operating risk: Southampton and the Scottish Central Belt Taxation and incentives: the Scottish Central Belt and Southampton Regulatory environment: Sydney and the Scottish Central Belt Source: fDi Intelligence, from the Financial Times Ltd

Labour Availability and Quality 15 The quality competitiveness breakdown for Labour Availability and Quality for the Renewable energy technology centre - Marine R&D * profile is shown below The locations with the highest overall scores for Labour Availability and Quality are New York City and Sydney Source: fDi Intelligence, from the Financial Times Ltd

Labour Availability and Quality Location Overall size of labour market Tightness and competition for labour Experienced industry- specific staff Flexibility of labour regulations Boston (MA) Lisbon New York City (NY) Scottish Central Belt Southampton Sydney In terms of the individual quality criteria within Labour Availability and Quality, the locations with the highest scores are: Overall size of labour market: New York City and Boston Tightness and competition for labour: Lisbon and the Scottish Central Belt Experienced industry-specific staff: New York City and Sydney Flexibility of labour regulations: New York City and Boston Source: fDi Intelligence, from the Financial Times Ltd

Presence of an Industrial Cluster The quality competitiveness breakdown for Presence of an Industrial Cluster for the Renewable energy technology centre - Marine R&D * profile is shown below The locations with the highest overall scores for Presence of an Industrial Cluster are New York City and Boston Source: fDi Intelligence, from the Financial Times Ltd

Presence of an Industrial Cluster Location Industry Specialisation Size of industryTrack record Research and Development Capabilities Boston (MA) Lisbon New York City (NY) Scottish Central Belt Southampton Sydney In terms of the individual quality criteria within Presence of an Industrial Cluster, the locations with the highest scores are: Industry Specialisation: Lisbon and Boston Size of industry: New York City and Boston Track record: the Scottish Central Belt and New York City Research and Development Capabilities: Boston and New York City Source: fDi Intelligence, from the Financial Times Ltd

Infrastructure and Accessibility The quality competitiveness breakdown for Infrastructure and Accessibility for the Renewable energy technology centre - Marine R&D * profile is shown below The locations with the highest overall scores for Infrastructure and Accessibility are New York City and Lisbon Source: fDi Intelligence, from the Financial Times Ltd

Infrastructure and Accessibility Location Access to major overseas markets Quality of local infrastructure Quality of utilities Quality of ICT infrastructure Boston (MA) Lisbon New York City (NY) Scottish Central Belt Southampton Sydney In terms of the individual quality criteria within Infrastructure and Accessibility, the locations with the highest scores are: Access to major overseas markets: New York City and Lisbon Quality of local infrastructure: New York City and Boston Quality of utilities: New York City and Boston Quality of ICT infrastructure: Lisbon and New York City Source: fDi Intelligence, from the Financial Times Ltd

Living Environment The quality competitiveness breakdown for Living Environment for the Renewable energy technology centre - Marine R&D * profile is shown below The locations with the highest overall scores for Living Environment are New York City and Sydney Source: fDi Intelligence, from the Financial Times Ltd

Living Environment Location Cost of living Attractiveness for international staff Boston (MA) Lisbon New York City (NY) Scottish Central Belt Southampton Sydney In terms of the individual quality criteria within Living Environment, the locations with the highest scores are: Cost of living: the Scottish Central Belt and Lisbon Attractiveness for international staff: New York City and Sydney Source: fDi Intelligence, from the Financial Times Ltd

To realise the potential, please contact: Scottish Development International 150 Broomielaw, Atlantic Quay Glasgow G2 8LU Scotland, UK T F Worldwide offices in: Americas, Europe, Middle East, Africa and Asia Pacific